The Indian stock market witnessed healthy buying in morning trade on Friday, August 9, with the Sensex and the Nifty 50 both rising by over a percent. The Sensex opened 1,098 points higher at 79,984.24, while the Nifty 50 opened at 24,386.85 and jumped 1.3 percent to 24,419.75. The mid and smallcap indices on the BSE also saw gains of over a percent each.
This positive momentum in the Indian stock market followed solid gains in the US market overnight, driven by better-than-expected US Labor Department data showing a decrease in weekly unemployment benefits claims. This news helped alleviate recession fears that had resurfaced after a weaker-than-expected July jobs report.
However, the Indian stock market has been experiencing high volatility recently, reacting to various factors such as global cues, central banks‘ actions, geopolitical tensions, Q1 earnings, and valuation concerns. The volatility index India VIX has increased by about 18 percent in August so far, making it challenging for investors to make informed decisions.
Despite the volatility, experts remain optimistic about the market’s medium-to-long-term outlook. They suggest that investors should use corrections as buying opportunities for quality stocks with a long-term perspective. While some believe that the market may experience a near-term correction due to rich valuations, they view it as an entry opportunity for investors.
Apurva Sheth, the head of market perspectives and research at SAMCO Securities, highlighted the recent rise in global market volatility due to various factors such as interest rate hikes, fears of a US recession, and geopolitical tensions. In such times of expensive valuations, markets tend to be more sensitive to uncertainties.
In terms of investment strategies, experts recommend switching from high beta aggressive stocks to defensive sectors like FMCG and pharma. They also suggest allocating some portion of the portfolio to gold as a hedge against market volatility. Additionally, technical experts advise adding long positions during market corrections to support levels and reducing weak long positions near resistance levels.
Looking ahead, experts anticipate that the market may continue to adjust to fundamentals and remain volatile in the short term. They advise investors to stay invested in quality stocks and maintain liquidity to take advantage of any market dips. Overall, the long-term outlook for the Indian stock market remains positive, with sectors like manufacturing, materials, and consumer durables expected to outperform post-Covid.
In conclusion, while the Indian stock market may face short-term challenges due to volatility and global uncertainties, investors are advised to focus on quality stocks, stay invested, and use corrections as buying opportunities for long-term growth. It is essential to consult certified experts before making any investment decisions and stay informed about market developments to make informed choices.